SINGAPORE - A new virtual mobile telco is setting up shop in Singapore with an unusual proposition to consumers - it charges more for mobile services than its competitor but lets subscribers lower their bill cost if they refer others.

Zero Mobile, which is due to start mobile services this month, charges $45 a month for 6GB of mobile data - which is about 60 per cent higher than the prevailing rate for a base plan here. Zero also throws in unlimited local calls, which other telcos don't for their base plans.

But customers can get a recurring credit of $9 per month for every person they refer to the service, capped at five. With five active referred customers, a Zero Mobile subscriber effectively gets his mobile services for free.

It also charges new subscribers a "joining fee" of $50, a fee no other telco here currently imposes.

The company, headquartered in Australia, has picked Singapore as the first country to launch in. It is the second virtual mobile telco to enter the Singapore market after Circles.Life. Virtual telcos do not build their own physical mobile networks, but lease them wholesale from one of the existing telcos. Zero Mobile's partner is Singtel, while Circles.Life works with M1.

Circles.Life also has a referral programme but offers more mobile data as a reward rather than bill credit. And it charges $28 a month for a similar plan.

Mr Daniel Waters, Zero Mobile's chief operating officer, told The Straits Times: "We have modelled our business in a manner where revenue derived directly from the subscriber is not our primary source of revenue."

He did not elaborate on the model but Mr Waters added that its Zero App - for service activation, billing and managing subscription plans - will feature deals from undisclosed retail partners in fashion, electronics, gaming and travel. The company also says that subscribers can get discounts on their bill by using the marketplace in the Zero App.

Reacting to the new telco's strategy, pre-school teacher Jasmine Kaur, 34, said: "People at the bottom of this referral marketing scheme do not benefit much. And if someone discontinues the service, people who referred them will stop receiving the credits."

Responding, Mr Waters said: "We certainly do not classify it as a multi-level marketing strategy because this is a short-term campaign for three months only and not our ongoing business model."

The Straits Times understands that there will be other promotions that could allow users to drive down their bills to zero after the three months.

For now, sign-ups for its service can be done online until Dec 15. Zero Mobile will start activating its service around Christmas for up to 5,000 subscribers. It will advise how many more customers it can activate every month from next month.

Explaining the sign-up limit, Mr Waters said: "We have to ensure that we have a balance of inward revenue from other avenues on our platform while providing a quality, premium service to subscribers. Our first priority is our sustainability."

He said that Zero Mobile will not start a price war, but will differentiate itself by offering customers a quick and easy way to activate and manage their mobile service plans and resolve complaints.

Zero currently does not offer international roaming. It has four employees in Singapore, but plans to hire 20 here over the next six weeks to fill software development, operations, marketing and sales positions. It currently hires about 20 people in its Australian outfit, founded 14 months ago.

The firm received its licence to operate here from the Infocomm Media Development Authority (IMDA) in September this year.

Local fibre broadband operator MyRepublic, which also received a virtual mobile telco licence from IMDA, is expected to offer services early next year.

Correction note: An earlier version of this story compared the Zero Mobile plan which provides unlimited calls to another plan without this feature. The story has been updated to better reflect the differences in the two plans.

The Straits Times

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